Over the past 20-30 years, what changes have occurred that now make it necessary for many households to have two incomes to stay afloat?
In: Economics
I was about to link https://wtfhappenedin1971.com/ but someone already did.
One interesting thing to add: Back when they introduced the first tractor, they advertised it with one machine being so productive that the farmer only needs to work 2 hours a day to get the same stuff done that he and his team did in a whole day.
Today, farmers still work 8 hours a day, the economy simply adapted to the fact that the farmer could work 8 hours a day, so now he does.
The cost to send your kids to colleges has soared.
The security of pensions after retirement have vanished.
And the loss of multigenerational homes makes having a large retirement savings necessary. In order to pay for assisted and nursing care elderly living.
All of which necessitates starting saving and investing for your kids college, your retirement, and to buy and build home equity as early as possible these days.
And it’s difficult to have enough money left over from saving for these future needs to live a comfortable middle class lifestyle in the between years. You want a yearly destination vacation? You want three sport leagues a year for your kids? A week or two at summer camp? That adds up fast.
Rises in most wages have not kept up with inflation despite huge increases in productivity. The extra wealth that has been introduced to the system has been “taken” by executives at the top.
The main thing that has happened is that wages haven’t increased but major costs like healthcare and housing have. Why has this happened? First, there’s more people but not that many more places for them to live. And of course you don’t want to live anywhere so all those people want to live in a few desirable areas driving costs way up. Second, women joining the work force in fuller force means that some households have two incomes and can afford to spend more on things like housing driving the price up. And then finally we have automation coming in and removing a lot of jobs that used to pay a reasonable wage. The highest performers can still find high paying jobs that are rewarded even more than they used to be because they can be add more value with modern tools and possess rare skillsets but those who have had jobs automated away now often have to take worse jobs. This creates a bigger wealth gap and allows the rich individuals to drive prices up further.
Every time this comes up I share this video.
Wealth Inequality in America visualized
byu/zaham_ijjan ininterestingasfuck
Wage growth has stagnated but costs have gone up. The top 1% has an increasing share of the total wealth leaving the bottom sharing less and less money.
People are trying to live on the same money while costs are taking a bigger chunk of their income.
People want a bigger house, more cars, more vacations, more awesome stuff.
A new house in the 1980s had 1200 square feet, 2-3 bedrooms sharing one bathroom, and maybe a garage but probably just a parking space.
I heard someone once say: “There are so many labor saving devices on the market today that a person has to work their entire life to afford them.”
Essentially, you can use your time, effort, and skill to perform tasks yourself, or specialize in one job so well to earn enough money to buy devices or other people’s time, effort, and skill to do those things for you.
**Everything is digitized**
Information became extremely cheap.
Skills became cheap and accesible to aquaire. **If something is easy, it is worthless**
Women instead of child rearing choosed carees driving competition on job market even highter. Lesser pressure on men to earn for two adults and some children made men to accept lower wages ( because rest will provide my wife)
**Noone invests** to actually benefit from increasing productivity, people just spend money on immiediate dopamine, so increasing productivity becomes only cost savings for company OWNERS
If something makes money it will cost money, and housing/ runnig watter and electricity have very stiff price function( demand do not decrease much with rising prices). Those things belong to people who had very ez access to actives when they were cheap (Boomers)
**International competition** with better/cheaper products became more prominent,
**Globalisation** unified local markets into bigger clusters where competition was severly higher, driving prices and wages down
In addition to what others have said, the growth in two-income households inflates the price of jointly-purchased assets in many cases – until two incomes are _necessary_ for such purchases.
Imagine selling a house. Three single-income couples are interested in the house and, whichever one buys it, you’re selling it for an amount that’s affordable for a single-income household.
Imagine selling the same house, but this time two single-income families and one two-income family are interested in it. The two-income household can offer more and so you sell it to them. So the price of the house is now higher.
As more families become two-income, they out-bid single-income households for housing and higher house prices become more common across the board. At that point, single-income households are financially incentivised to become two-income households, creating further house price rises.
Two-income households have been the majority [since the 70s,](https://www.bls.gov/opub/mlr/2020/article/comparing-characteristics-and-selected-expenditures-of-dual-and-single-income-households-with-children.htm#:~:text=Both%20full%20time-,Employment%2Dstatus%20proportions,from%2052%20to%2058%20percent.) and the rate hasn’t really changed at all since the mid-nineties. So the assumption baked into your question is not super accurate to begin with.
Additionally, median personal income [has never been higher](https://fred.stlouisfed.org/series/MEPAINUSA672N) relative to expenses. Which suggests that if families wanted to live the single income lifestyle of their parents or grandparents, they could.
So, to the extent that they’re choosing not to (which, again, is smaller than you think)… why is that? *Probably* because the opportunity cost of staying out of the workforce has also never been higher. So more people are choosing the lifestyle bump achievable from two incomes.
Latest Answers